U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

Annual Report under Section 13 or 15(d) of the  Securities  Exchange Act of 1934
for the fiscal year ended December 31, 1999.

Transition  report under Section 13 or 15(d) of the  Securities  Exchange Act of
1934 for the transition period from to                    .
                                       ------------------

                           Commission File No. 0-18271


                            MAGELLAN TECHNOLOGY, INC.
                    -----------------------------------------
                 (Name of small business issuer in its charter)


        Utah                                            87-0467614
---------------------------------           -----------------------------------
(State or other jurisdiction of           (IRS Employer Identification No.)
 Incorporation or Organization)

12411 South 265 West, Suite F
Draper, Utah                                                           84020
---------------------------------------                                -----
(Address of principal executive offices)                            (Zip Code)


Issuer's telephone number, including area code:  (801) 501-7517

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:

         Common Stock
         Par Value $.0002 per Share
         --------------------------
         (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes - X - No _____

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
issuer's knowledge,  in definitive proxy or information statements  incorporated
by  reference  in Part III of this  form  10-KSB or any  amendment  to this form
10-KSB.

The issuer's revenues for its most recent fiscal year totaled $7,601,404.

The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the price at which the stock was sold,  or the average bid and
ask prices of such stock as of December 31, 1999 was $5,989,549.

27,474,997 shares of the issuer's common stock were issued and outstanding as of
December 31, 1999.


Transitional Small Business Disclosure Format (Check one):
                                                   Yes      No - X -
                                                      -----    -----

<PAGE>


                                TABLE OF CONTENTS


PART I

         Item 1.  Description of Business . . . . . . . . . . . . . . .  1

         Item 2.  Description of Property . . . . . . . . . . . . . . .  4

         Item 3.  Legal Proceedings   . . . . . . . . . . . . . . . . .  5

         Item 4.  Submission of Matters to a Vote of Security Holders .  5


PART II

         Item 5.  Market for Common Equity and Related Stockholder
                           Matters . . . . . . . . . . . . . . . . . . . 6

         Item 6.  Management's Discussion and Analysis or
                           Plan of Operation . . . . . . . . . . . . . . 8

         Item 7.  Financial Statements. . . . . . . . . . . . . . . . . 13

         Item 8.  Changes in and Disagreements with Accountants on
                           Accounting and Financial Disclosure . . . . .13

PART III

         Item 9.  Directors, Executive Officers, Promoters and Control
                           Persons; Compliance with Section 16a of the
                           Exchange Act. . . . . . . . . . . . . . . . .14

         Item 10. Executive Compensation . . . . . . . . . . . .  . . . 16

         Item 11. Security Ownership of Certain Beneficial Owners and
                           Management. . . . . . . . . . . . . . . . . .18

         Item 12  Certain Relationships and Related Transactions  . . . 19


PART IV

         Item 13  Exhibits and Reports on Form 8-K  . . . . . . . . . . 21


SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22




<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Business Development

Magellan  Technology,  Inc. (the "Company" or "Magellan") was incorporated under
the laws of the  State of Utah on June 16,  1989.  Its  founders  organized  the
Company for the  purpose of raising  capital  and  seeking  profitable  business
opportunities.

In February  1992,  the Company  completed the  acquisition  of Satellite  Image
Systems,  Inc. ("SIS"), a Utah corporation engaged in providing image-based data
entry services  utilizing licensed and proprietary data entry and communications
software.  The  acquisition  was  accomplished  by merging SIS with and into the
Company's wholly owned subsidiary,  SIS  International,  Inc. with SIS being the
surviving corporation.  Through the merger, SIS became a wholly owned subsidiary
of the Company.  In August 1996, the Company  announced the formation of a joint
venture  with United  Insurance  Companies,  Inc.  ("UICI") of Dallas,  Texas to
expand  UICI's  presence  in  the  medical  claims  processing   business.   SIS
contributed its technology,  operations and management to a newly-formed entity,
SIS,  LLC. UICI  contributed  $3 million in cash and a $2 million line of credit
for working  capital.  The Company retained a 46.5% interest in SIS, LLC. Darwin
D. Millet,  formerly President of SIS, became the Chief Executive Officer of the
newly-formed  limited  liability  company.  UICI  is a  financial  company  with
interest  in life and health  insurance  and  related  services,  including  the
administration and delivery of managed health care programs to selected markets.

         In October  1996,  the Company  completed  the  acquisition  of SkyHook
Technologies, Inc., a Utah Corporation ("SkyHook") organized in 1995 and engaged
in  development   of   proprietary,   cargo-management   systems  for  use  with
helicopters.  SkyHook's initial cargo-management product is the SkyHook External
Cargo Management System ("ECMS") which is a  computer-controlled,  multiple-hook
cargo carrying device that attaches to a long line beneath the  helicopter.  The
acquisition was  accomplished  with the exchange of 4,874,936 shares of Magellan
Common  Stock for all issued and  outstanding  shares of SkyHook  Common  Stock.
SkyHook then became a wholly owned subsidiary of the Company.

         In April 1997, the Company  organized  Magellan Service Company ("MSC")
as  a  wholly  owned   subsidiary  to  pursue  avionics   integration   contract
opportunities.

         In October 1997,  the Company  completed the  acquisition  of BioSource
Inc.  ("BioSource"),  a Utah  corporation  organized  in 1983 and engaged in the
development and sales of the "LISTEN"  biofeedback  information  system which is
marketed and sold to healthcare  practitioners in the  complementary  healthcare
marketplace. The acquisition was ultimately accomplished through the exchange of
$190,000 in cash and 225,000 shares of Magellan Common Stock in exchange for all
issued  and   outstanding   shares  of  BioSource   Common  Stock.   BioMeridian
International, Inc. ("BioMeridian") was formed as the surviving entity.

         In May 1998,  the Company  completed the sale of its 46.5%  interest in
SIS, LLC to UICI of Dallas,  Texas resulting in the complete  divestiture of the
Company's involvement in image-based data entry services.  The company completed
the sale  primarily  for the  purpose of raising  funds for the  acquisition  of
additional entities deemed strategically beneficial to the Company. The sale was
completed for $1,500,000 and resulted in a gain on sale of $180,023.

         In May 1998, the Company  completed the acquisition of certain licenses
and technology of Digital Health,  LLC, a Utah limited liability company engaged
in a business similar to that of BioMeridian.  This acquisition was completed in
an effort to improve the market share and market  position of  BioMeridian  with
its  technology  based  Meridian  Stress  Assessment  ("MSA")  equipment  in the
complementary  healthcare  marketplace through the immediate  acquisition of FDA
registration of the technology.  The  acquisition was  accomplished  through the
exchange of  1,375,000  shares of common  stock and  $250,000 in cash payable in
monthly installments of $15,000. The operations of Digital Health, LLC were then
combined with BioMeridian.

         In September 1999 the Company  completed the  acquisition of Biological
Technologies  International,  Inc.  (BTI) which the Company  acquired  effective
September 17, 1999 through its wholly-owned subsidiary BTI Acquisition Corp. The
acquisition of BTI included the issuance of 3,024,024  shares of Magellan common
stock for all of the outstanding shares of BTI common stock. The acquisition was
accounted for as a "pooling of interests" transaction.

         In December 1999,  the Company  completed the  disposition  and sale of
SkyHook to  Envirofoam  Technologies,  Inc.  (EFT).  The sale was  completed  in
exchange for $3,000,000.  Of this sale amount,  a note payable was issued by EFT
in the amount of $2,500,000  and a management  fee for services  rendered in the
amount of $500,000  will be paid to  Magellan.  On the closing date of this sale
transaction,  $500,000  was paid and  received  against the note payable and the
remaining  $2,000,000 will be paid in four consecutive payments of $500,000 over
the next four months,  with the first payment due on or before January 31, 2000.
On March 9, 2000,  the terms of repayment of the note were amended.  The January
31, 2000  payment  was  received  in the amount of  $500,000  and the  remaining
balance will now be received over 3 monthly payments in the amounts of $100,000,
$500,000 and $900,000,  respectively,  beginning  March 31, 2000. The management
fee of $500,000 remains due and payable on or before May 31, 2000.

         Due to difficulty EFT has had raising investment  capital,  the Company
is currently in discussion with EFT regarding the  possibility of  restructuring
the timing and form of the remaining payments on the note payable. The Board has
tentatively approved a proposal by EFT which would provide for the conversion of
a portion of the remaining balance on the note payable to common stock of EFT if
certain  conditions  are met.  A cash  payment  will be made  for the  remaining
portion on the note payable not converted to common stock.  There can,  however,
be no assurance that such  discussions will result in a formal agreement or that
such agreement will be reached on terms favorable to the Company.

Business of the Company

         BioMeridian

         PRODUCTS:  BioMeridian  manufactures  and sells the  MSA/IMAG  and BEST
systems to healthcare practitioners throughout the world. This equipment is used
to assess  stress  and  assist  healthcare  practitioners  in the  analysis  and
treatment  of  certain  conditions.  If stress or  imbalance  is  detected  in a
patient,  the  systems  assist  the  practitioner  in  recommending  a course of
treatment or therapy to alleviate the stress or to restore balance to the body's
meridian  systems.  BioMeridian  also  provides  training  classes  and  support
services for health care practitioners that utilize these systems.  The MSA/IMAG
system  is  registered  with  the  U.S.  Food  and  Drug   Administration  as  a
stress-monitoring device.

         MARKETS:  The emerging market for Meridian Stress Assessment  equipment
is worldwide,  crossing the boundaries of health care disciplines.  The MSA/IMAG
and BEST systems are useful in the practice of medicine, osteopathy, homeopathy,
naturopathy, acupuncture, and other complementary disciplines.

         COMPETITION:  There are at least nine other devices sold throughout the
world that are somewhat similar to the MSA/IMAG and BEST systems. These products
are  grouped  into two  general  categories:  1) Simple  electronic  measurement
devices, which demonstrate older and less dynamic technology and 2) computerized
devices, which are similar in approach to the MSA/IMAG and BEST systems.

         MANUFACTURING:  BioMeridian  currently contracts with a third party for
the assembly of the  MSA/IMAG  and BEST  systems in a facility  located in Orem,
Utah. Other  subassemblies of the product are also currently  subcontracted with
other various vendors.

         INTELLECTUAL  PROPERTY:   BioMeridian  is  presently  pursuing  various
copyrights  and other  protection  for the MSA/IMAG and BEST  software and other
device design property.

         GOVERNMENT  REGULATION:  In the United States,  the MSA/IMAG system has
current FDA registration.  Use of the BEST system  internationally is subject to
various  regulatory  requirements on a country by country basis. The product has
received  various forms of regulatory  compliance for use in Canada,  Australia,
South Africa and Germany.

         EMPLOYEES: BioMeridian currently employs thirty (30) persons. Eight (8)
employees are in  administration  and finance,  ten (10) in sales and marketing,
three (3) in training and education,  four (4) in customer  support and five (5)
in  operations  and   engineering.   BioMeridian  has  established   independent
representatives in outlying geographical locations domestically. The Company has
current  contracts  with 17  domestic  independent  representatives  in  various
geographical   locations  across  the  United  States.   The  Company  has  also
established relationships with 12 independent international distributors.

         Biological Technologies International, Inc. (BTI)

         PRODUCTS:  BTI is  the  leader  in  the  field  of  biological  terrain
assessment, and, to the knowledge of the Company, the only company in the United
States that  produces a biological  terrain  assessment  device.  The  principal
product of BTI is the BTA S-2000.  This product tests blood,  saliva,  and urine
for the factors of pH (acid-alkaline  balance),  rH2 (oxidative  stress),  and r
(gross mineral  concentration)  and provides the practitioner with an immediate,
objective assessment of a patient's individual biochemistry.

         MARKETS:   The  emerging  market  for  Biological   Terrain  Assessment
equipment is worldwide,  crossing the boundaries of health care disciplines. The
BTA  S-2000 is useful  in the  practice  of  medicine,  osteopathy,  homeopathy,
naturopathy, acupuncture, and other complementary disciplines.

         COMPETITION:  To the  best  of our  knowledge  there  is  currently  no
competing device available in the United States at this time.

         MANUFACTURING:  BTI  currently  contracts  with a third  party  for the
assembly  of  the  BTA  S-2000  in  a  facility  located  in  Denver,  Colorado.
Subassemblies of the product are also currently subcontracted with other various
vendors.

         INTELLECTUAL   PROPERTY:   A  patent  is  pending  and  trademarks  and
copyrights already exist on the BTA S-2000 and its technology.

         GOVERNMENT  REGULATION:   The  BTA  S-2000  has  FDA  registration  and
manufacturing  compliance  status.  The  BTA  also  holds  CE and CSA  marks  of
registration to allow for sales into the foreign market place.

         EMPLOYEES:  BTI currently  employs five (5) persons.  Two (2) employees
are in administration and finance, two (2) in sales and marketing and one (1) in
customer support. BTI also utilizes the established independent  representatives
and independent international distributors relationships of BioMeridian.

Company Information

The Company will not be sending annual reports to its shareholders.  The Company
does file  annual  reports on Form 10-KSB and  quarterly  reports on Form 10-QSB
with the  Securities and Exchange  Commission.  The public may read and copy any
materials  filed with the SEC at the SEC's  Public  Reference  Room at 450 Fifth
Street,  N.W.,  Washington D.C. 20549. The public may obtain  information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC  maintains an Internet  site that contains  reports,  proxy and  information
statements  regarding  the  Company.  The  Internet  address  of  such  site  is
http://www.sec.gov.

ITEM 2.  DESCRIPTION OF PROPERTY

         BioMeridian

         BioMeridian  currently  leases  one  facility  in  Draper,  Utah.  This
facility  is  the   headquarters   for  Magellan,   BioMeridian  and  Biological
Technologies  International,  Inc. It consists of 5,563  square-feet  office and
2,741  square-feet  high-bay  shop.  The  initial  lease  term is for 15  months
beginning  the 21st day of March  1999 and  ending on the 30th day of June 2000.
There is an option to extend  this lease for three  years  until the 30th day of
June 2003.

         BTI

         BTI  currently  leases one facility  located in Payson,  Arizona.  This
facility has a month-to-month lease arrangement.

Investment policy with Respect to Real Estate Related Investments

         The Company  currently does not make  investments in real estate,  real
estate mortgages or securities of or interests in persons  primarily  engaged in
real estate activities.

ITEM 3.  LEGAL PROCEEDINGS

         The  Company  is  party  to one  proceeding,  which  is  considered  by
Management to be routine litigation incidental to the business, and which is not
product related.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None



<PAGE>


                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         MARKET  INFORMATION:  The  Company's  common  stock  is  traded  in the
over-the-counter  market. The following table sets forth the range of quotations
for the  Company's  common stock for the  quarters  indicated.  Such  quotations
reflect  inter-dealer prices,  without retail mark-up,  mark-down or commission,
and may not necessarily represent actual transactions.


------------------------------------------- ------------------ -----------------
   Fiscal Year Ended December 31, 1999            High Bid           Low Bid
------------------------------------------- ------------------ -----------------
First Quarter                                       $ 1.00              $.31
Second Quarter                                         .94               .44
Third Quarter                                         1.03               .38
Fourth Quarter                                         .50               .19
------------------------------------------- ------------------ -----------------


------------------------------------------- ------------------ -----------------
   Fiscal Year Ended December 31, 1998           High Bid           Low Bid
------------------------------------------- ------------------ -----------------
First Quarter                                     $ 1.50              $.87
Second Quarter                                      1.56               .69
Third Quarter                                       1.69               .81
Fourth Quarter                                      1.28               .37
------------------------------------------- ------------------ -----------------


         SHAREHOLDERS:  The approximate  number of shareholders of record of the
Company's  common stock as of March 31, 2000 was two hundred (200).  This number
does not  include  shareholders  whose  shares are held in  securities  position
listings.

         DIVIDENDS:  The Company has not paid any cash  dividends  on its common
stock and does not anticipate  paying dividends in the foreseeable  future.  The
Company presently intends to retain future earnings for financing the growth and
expansion of the Company.

         UNREGISTERED  SALE OF  SECURITIES:  The  Company  sold 20,000 and 9,334
shares of common stock for 37 cents and 37.5 cents per share respectively during
the year ended December 31, 1999.  These sales were to two individuals  pursuant
to the Company's stock incentive plan.

         The Company sold 428,572  shares of common stock for 35 cents per share
to unrelated parties during the year ended December 31, 1999.

         The Company  issued  100,000  shares of common stock in settlement of a
contract  disagreement  with a  shareholder  during the year ended  December 31,
1999.

         In February  1999,  the Company  acquired  certain  assets known as the
P.I.C.E.  technology from an individual in exchange for 250,000 shares of common
stock.

         In March 1999, the Company  converted various notes payable due William
A. Fresh or entities  controlled by him to common stock. The total amount of the
notes  payable prior to conversion  was  $1,200,000  and the number of shares of
common stock exchanged by the Company was 3,428,571 at 35 cents per share.

         In March 1999,  the Company  converted  two separate  convertible  note
payable agreements from unrelated parties to common stock at 35 cents per common
share.  The amounts of the notes payable  prior to conversion  were $350,000 and
$200,000.  The number of shares of common  stock  exchanged  by the  Company was
1,000,000 and 571,429 respectively.

         The Company converted one note payable due Ballard  Investments  during
the year  ended  December  31,  1999.  The amount of the note  payable  prior to
conversion  was $100,000  and the number of shares of common stock  exchanged by
the Company was 285,714 at 35 cents per share.  In  addition,  accrued  interest
payable of $11,033 to Ballard  Investments  was also  converted  to common stock
through the exercise of stock  warrants.  Warrants  for 31,523  shares of common
stock were issued at 35 cents per share.

         In April 1999,  the Company  converted a note payable from an unrelated
party to common stock at 35 cents per common share. The total amount of the note
payable  prior to  conversion  was  $100,000  and the number of shares of common
stock exchanged by the Company was 285,714.

         In April 1999,  the Company  converted a note payable from an unrelated
party to common stock at 30 cents per common share. The total amount of the note
payable prior to conversion was $25,000 and the number of shares of common stock
exchanged by the Company was 82,679. In addition,  stock warrants were exercised
by the same  unrelated  party for 3,750  shares of common  stock at an  exercise
price of 25 cents per share.

         In April 1999,  the Company  converted a note payable from an unrelated
party to common stock at 35 cents per common share. The total amount of the note
payable prior to conversion was $50,000 and the number of shares of common stock
exchanged by the Company was 142,857.

         In September 1999 the Company  completed the  acquisition of Biological
Technologies International,  Inc. (BTI) through the issuance of 3,024,024 shares
in  exchange  for all the  issued  and  outstanding  common  stock of BTI.  This
transaction  was  accounted  for  using the  "Pooling  of  Interests"  method of
accounting.

         The Company  converted  two  separate  accounts  payable  balances  due
vendors  to common  stock at 35 cents and 50 cents per common  share  during the
year ended December 31, 1999. The amounts of the accounts payable balances prior
to  conversion  were $25,000 and $7,567 and the number of shares of common stock
exchanged by the Company was 71,429 and 15,135 respectively.

         In June 1998 the Company  completed the  acquisition of Digital Health,
LLC through the issuance of 1,375,000 shares in exchange for all the outstanding
common  stock of Digital  Health,  LLC. The shares were issued at 87.5 cents per
share.

         The Company  converted  various  notes  payable due William A. Fresh or
entities  controlled  by him to common stock during the year ended  December 31,
1998.  The total amount of the notes payable prior to conversion  was $1,150,000
and the number of shares of common stock  exchanged by the Company was 1,533,333
at 75 cents per share.  Accrued  interest payable of $37,906 to William A. Fresh
or entities  controlled  by him was also  converted to common stock  through the
exercise of stock  warrants.  Warrants  for 108,338  shares of common stock were
issued at 30 cents per share and 14,608 shares of common stock were issued at 37
cents per share.

         The Company converted one note payable due Richard I. Winwood to common
stock during the year ended  December  31, 1998.  The amount of the note payable
prior to  conversion  was  $250,000  and the  number of  shares of common  stock
exchanged  by the Company was  333,333 at 75 cents per share.  Accrued  interest
payable of $8,645 to Richard I. Winwood or entities  controlled  by him was also
converted to common stock through the exercise of stock  warrants.  Warrants for
28,816 shares of common stock were issued at 30 cents per share.

         The Company  converted  one note  payable due Judith  Edwards to common
stock during the year ended  December  31, 1998.  The amount of the note payable
prior to  conversion  was  $250,000  and the  number of  shares of common  stock
exchanged by the Company was 333,333 at 75 cents per share.

         The Company sold 125,000  shares of stock for 81 cents per share to one
individual  pursuant to the Company's stock incentive plan during the year ended
December 31, 1998.

         The  preceding  issuance  of shares of common  stock of the  Company to
individuals  or entities  pursuant to such share  exchange  was made in reliance
upon the exemption provided by section 4 (2) of the Securities Act of 1933.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         In September 1999 the Company  completed the  acquisition of Biological
Technologies  International,  Inc.  (BTI) which the Company  acquired  effective
September 17, 1999 through its wholly-owned subsidiary BTI Acquisition Corp. The
acquisition of BTI included the issuance of 3,024,024  shares of Magellan common
stock for all of the outstanding shares of BTI common stock. The acquisition was
accounted for as a "pooling of interests" transaction.

         In December 1999,  the Company  completed the  disposition  and sale of
SkyHook to  Envirofoam  Technologies,  Inc.  (EFT).  The sale was  completed  in
exchange for $3,000,000.  Of this sale amount,  a note payable was issued by EFT
in the amount of $2,500,000  and a management  fee for services  rendered in the
amount of $500,000  will be paid to  Magellan.  On the closing date of this sale
transaction,  $500,000  was paid and  received  against the note payable and the
remaining  $2,000,000 will be paid in four consecutive payments of $500,000 over
the next four months,  with the first payment due on or before January 31, 2000.
On March 9, 2000,  the terms of repayment of the note were amended.  The January
31, 2000  payment  was  received  in the amount of  $500,000  and the  remaining
balance will now be received over 3 monthly payments in the amounts of $100,000,
$500,000 and $900,000,  respectively,  beginning  March 31, 2000. The management
fee of $500,000 remains due and payable on or before May 31, 2000.

Due to  difficulty  EFT has had  raising  investment  capital,  the  Company  is
currently in discussion with EFT regarding the possibility of restructuring  the
timing and form of the  remaining  payments on the note  payable.  The Board has
tentatively approved a proposal by EFT which would provide for the conversion of
a portion of the remaining balance on the note payable to common stock of EFT if
certain  conditions  are met.  A cash  payment  will be made  for the  remaining
portion on the note payable not converted to common stock.  There can,  however,
be no assurance that such  discussions will result in a formal agreement or that
such agreement will be reached on terms favorable to the Company.

         In May 1998,  the Company  completed the sale of its 46.5%  interest in
SIS, LLC to UICI of Dallas,  Texas resulting in the complete  divestiture of the
Company's involvement in image-based data entry services.  The company completed
the sale  primarily  for the  purpose of raising  funds for the  acquisition  of
additional entities deemed strategically beneficial to the Company. The sale was
completed for $1,500,000 and resulted in a gain on sale of $180,023.

         In May 1998 the Company  completed the acquisition of certain  licenses
and technology of Digital Health,  LLC, a Utah limited liability company engaged
in a business similar to that of BioMeridian.  This acquisition was completed in
an effort to improve the market share and market  position of  BioMeridian  with
its technology based meridian stress  assessment  equipment in the complementary
healthcare  marketplace through the immediate acquisition of FDA registration of
the  technology.  The  acquisition  was  accomplished  through  the  exchange of
1,375,000  shares of common  stock  and  $250,000  in cash  payable  in  monthly
installments  of  $15,000.  The  operations  of  Digital  Health,  LLC were then
combined with BioMeridian.  As part of the transaction,  the Company recorded an
asset for the  Licenses &  Technology  of Digital  Health,  LLC in the amount of
$1,453,125.  The  acquisition  and  combination of these licenses and technology
into the Magellan family of companies has effectively  positioned BioMeridian to
compete in the emerging "Complementary Health Care" marketplace.

Results of Operations

         BioMeridian

         BioMeridian  manufactures  and sells the  MSA/IMAG  and BEST systems to
healthcare  practitioners throughout the world. This equipment is used to assess
stress and assist  healthcare  practitioners  in the analysis  and  treatment of
certain conditions. If stress or imbalance is detected in a patient, the systems
assist the  practitioner  in  recommending  a course of  treatment or therapy to
alleviate  the stress or to restore  balance  to the  body's  meridian  systems.
BioMeridian also provides  training classes and support services for health care
practitioners that utilize these systems. The MSA/IMAG system is registered with
the U.S. Food and Drug Administration as a stress-monitoring device.

         For the year  ended  December  31,  1999,  BioMeridian  achieved  sales
revenues of $6,243,142  that resulted in an operating loss of $165,912  compared
with  sales  revenues  of  $2,605,952  that  resulted  in an  operating  loss of
$1,001,063 for the year ended  December 31, 1998.  The 1998 results  reflect the
operations of BioMeridian  for the entire year with the resulting  effect of the
acquisition of the licenses and technology of Digital Health,  LLC from May 1998
through December 31, 1998.

         The significant increase in sales is the result of the synergies of the
acquired  assets and technology of BioSource and Digital Health and the expanded
user base along with improved sales  techniques  and  performance of independent
and in-house sales  representatives.  The continued  operating loss is primarily
due to  unusually  high selling  expenses  and  operating  overhead  costs.  The
increased  overhead  costs are the result of improved  marketing  strategies and
improved customer support and training personnel.

         Although  BioMeridian has experienced an operating loss during the year
ended December 31, 1999, significant  improvement is evident and the Company now
believes that BioMeridian has reached a sustainable  revenue level and is poised
to achieve profitable operating results during the year 2000.

         BTI

         BTI is the leader in the field of biological  terrain  assessment,  and
the only  company in the  United  States  that  produces  a  biological  terrain
assessment device. The principal product of BTI is the BTA S-2000.  This product
tests blood,  saliva,  and urine for the factors of pH (acid-alkaline  balance),
rH2 (oxidative  stress),  and r (gross mineral  concentration)  and provides the
practitioner with an immediate,  objective  assessment of a patient's individual
biochemistry.

         For the year ended  December 31, 1999,  BTI achieved  sales revenues of
$1,358,262  that  resulted in an operating  loss of $98,870  compared with sales
revenues of $1,748,416  that  resulted in an operating  loss of $409,559 for the
year ended  December  31, 1998.  The decrease in sales and the  reduction in the
operating  loss are both  primarily the result of closing the eastern U.S. sales
office located in Manchester, MA.

         Although BTI has  experienced  an operating  loss during the year ended
December  31,  1999,  significant  improvement  is evident  and the  Company now
believes  that BTI, by means of  utilization  of  BioMeridian's  sales force and
other efficiencies, is poised to achieve profitable operating results during the
year 2000.

         SkyHook

         For the year ended December 31, 1999,  SkyHook  achieved sales revenues
of $288,763  that resulted in an operating  loss of $1,545,079  compared with no
sales  revenues  that resulted in an operating  loss of $3,102,484  for the year
ended December 31, 1998. Therefore,  due to continued substantial SkyHook losses
and DoD procurement  delays,  the Company's board of directors elected to divest
SkyHook and focus  exclusively  on  healthcare in the  complementary  healthcare
marketplace. The divestiture of SkyHook was completed in December 1999 resulting
in a gain on sale of $3,083,055.

Liquidity and Capital Resources

         The Company's  sources of liquidity  have  historically  been cash from
operations,  working  capital  lines of credit  and debt and  equity  financing.
BioMeridian  has  generated  an  increased  amount of revenues  and has achieved
profitable  operations  during  the last two  quarters  of  1999.  However,  the
operations of SkyHook required significant amounts of cash for operations during
1999. As a result,  the Company has  accumulated a considerable  amount of debt.
Therefore,  the Company must rely on profitable  operations and continue to seek
additional debt and/or equity financing opportunities.

         During 1999 and 1998 the Company  entered  into several  agreements  to
borrow necessary funds.

         On May 19, 1998 the company entered into a $3,000,000 revolving line of
credit  agreement.  During the year ended December 31, 1999, the Company made no
additional  borrowings under this revolving line of credit.  This revolving line
of credit matures on May 31, 2000 and is secured by the Company's  inventory and
receivables  and by the personal  guarantees  of the Company's  Chief  Executive
Officer,  a  Director,  and a major  shareholder.  As of  December  31, 1999 the
Company had an  outstanding  balance of $2,496,158  under this revolving line of
credit.

         During the year ended  December  31,  1999 the  Company  borrowed a net
amount of $295,000 from the Company's Chief Executive Officer,  or from entities
controlled  by this  individual,  under two  separate  $100,000  unsecured  note
payable  agreements,  one $50,000 unsecured note payable agreement,  one $30,000
unsecured  note  payable  agreement,  and one  $15,000  unsecured  note  payable
agreement.  Each note payable bears  interest at 12% and is payable upon demand.
In addition,  the Company borrowed  $50,000 under an unsecured  convertible note
payable  agreement and $25,000 under an unsecured  note payable  agreement  from
stockholders.  Each note  payable  bears  interest  at 12% and is  payable  upon
demand. The Company also borrowed $50,000 from an entity under an unsecured note
payable  agreement  that bears  interest at 10%. The Company has since  acquired
this entity.

         During the year ended  December  31, 1999,  the Company  also  borrowed
$350,000,  $200,000,  $100,000, $25,000 and $50,000 from unrelated parties under
separate  convertible  note payable  agreements.  Each  convertible note payable
bears  interest  at 12% and  contains  a  provision  for the  conversion  of the
principal  amount to common  stock at a specified  price.  In March and April of
1999, these  convertible note payable  agreements were converted to common stock
at $.35 and $.30 per common share. In addition,  the Company borrowed  $200,000,
$100,000,  $25,000 and $25,000 from unrelated parties under separate convertible
note payable agreements. Each bears interest at 12% and contains a provision for
the conversion of the principal amount to common stock at a specified price. The
funds from these transactions were used to finance operations.  In addition, the
Company  converted  certain  accounts payable to a vendor into a note payable in
the amount of $39,313.  This note payable bears interest at 9% and is payable at
the end of six months from the date of issuance.

         The Company  borrowed a total amount of $367,407  from EFT prior to the
disposition   and  sale  of  SkyHook  under  several   individual  note  payable
agreements.  Each bears interest at 12%. These borrowings were primarily used to
fund continuing operations of SkyHook.

         The  Company  also  entered  into one  capital  lease in the  amount of
$18,798  to acquire  and  install a  financial  accounting  system  used for all
Magellan  companies.  The terms of this lease  include  monthly  payments in the
amount of $585 for four (4) years.

         Effective  March 31, 1999,  $1,300,000  of related  party notes payable
were  converted to common stock of the Company.  In addition,  accrued  interest
payable on related  party notes payable of $11,033 was used by one related party
to exercise warrants to purchase common stock.

         The Company has made  significant  investment  and effort over the last
five years into the  establishment  of a sound framework for operating  entities
that are well  positioned  in their  respective  marketplaces.  With the sale of
SkyHook,  the  Company  will now  focus  its full  management  attention  on its
profitable   Complementary  Health  Care  initiatives.   Management  anticipates
continued  profitable  growth and feels that  BioMeridian and BTI are poised for
success and future  profitable  operations.  However,  there can be no assurance
that the  Company  will be able to  maintain  profitable  operations  or  obtain
desired debt or equity capital on terms favorable to the Company. If the Company
is  unable  to  raise  additional  capital,   the  ability  of  the  Company  to
successfully  market and  distribute  its  products  and  services  through  its
operating  subsidiaries and its financial condition are dependent upon continued
profitability and could be materially adversely affected.

         During 1998, a Director/Shareholder  who also serves as the Chairman of
the Board loaned $2,590,000 to the Company through either himself or entities in
which he held a  controlling  interest.  The notes bear  interest at 12% and are
payable  upon  demand.  During  1998,  $1,150,000  of these notes  payable  were
converted to common stock of the Company.  In addition,  the interest payable of
$37,906 was used by the  Director/Shareholder  to exercise  warrants to purchase
common stock.

         During 1998, a Director/Shareholder converted $250,000 of notes payable
to common stock of the Company. In addition,  the interest payable of $8,645 was
used by the  Director/Shareholder to exercise warrants to purchase common stock.
Also, an additional note payable held by an individual of $250,000 was converted
to common stock.

         Factors Affecting Future Results

         The Company had a deficit in working capital as of December 31, 1999 of
$2,078,921  as  compared  to a deficit in working  capital of  $5,463,018  as of
December 31,  1998.  As indicated  above,  the Company is in need of  additional
equity and/or debt  financing in order to meet it  obligations.  There can be no
assurance,  however, that such financing will be available on terms favorable to
the Company,  if at all. If the Company is unable to raise  additional  capital,
the ability of the Company to  successfully  market and  distribute its products
and services through its operating  subsidiaries and its financial condition are
dependent  upon  continued  profitability  and  could  be  materially  adversely
affected.

         The Company's  future  operations and liquidity will be affected by the
ability of BioMeridian  and BTI to continue to sell and market their  respective
products,  compete with existing  competitors,  and satisfy the needs of current
and future customers to the extent that profitability will be maintained.

ITEM 7.  FINANCIAL STATEMENTS

         The  consolidated  financial  statements  of the Company and its wholly
owned subsidiaries can be found on pages F-1 through F-21 of this Form 10-KSB.


<PAGE>

                                                       MAGELLAN TECHNOLOGY, INC.
                                      Index to Consolidated Financial Statements

--------------------------------------------------------------------------------

                                                                            Page
                                                                            ----

Independent auditors' report                                                F-2


Consolidated balance sheet                                                  F-3


Consolidated statement of operations                                        F-4


Consolidated statement of stockholders' equity
  (deficit)                                                                 F-5


Consolidated statement of cash flows                                        F-6


Notes to consolidated financial statements                                  F-7



                                                                             F-1

<PAGE>



                                                    INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
of Magellan Technology, Inc.


We have audited the consolidated balance sheet of Magellan Technology, Inc. (the
Company) as of December 31, 1999,  and the related  consolidated  statements  of
operations,  stockholders'  equity  (deficit) and cash flows for the years ended
December 31, 1999 and 1998.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Magellan Technology,
Inc. as of December 31, 1999, and the results of their operations and their cash
flows  for the years  ended  December  31,  1999 and 1998,  in  conformity  with
generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 3 to the
consolidated financial statements,  there is substantial doubt about the ability
of the Company to continue as a going concern.  Management's  plans in regard to
that matter are also described in note 3. The consolidated  financial statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.



                    TANNER+Co.


Salt Lake City, Utah
February 18, 2000

                                                                             F-2

<PAGE>
<TABLE>
<CAPTION>



                                                                                 MAGELLAN TECHNOLOGY, INC.

                                                                                Consolidated Balance Sheet

                                                                                         December 31, 1999
----------------------------------------------------------------------------------------------------------



              Assets
              ------

<S>                                                                                     <C>
Current assets:
     Cash                                                                               $          280,199
     Receivables, net                                                                            1,095,484
     Inventories, net                                                                              135,731
     Note receivable                                                                             2,500,000
     Other current assets                                                                           45,674
                                                                                        ------------------

                  Total current assets                                                           4,057,088

Long-term accounts receivable                                                                       28,491
Property and equipment, net                                                                        205,838
Goodwill, net                                                                                      598,673
Licenses and technology, net                                                                     1,408,984
                                                                                        ------------------

                  Total assets                                                          $        6,299,074
                                                                                        ------------------

----------------------------------------------------------------------------------------------------------

              Liabilities and Stockholders' Equity
              ------------------------------------

Current liabilities:
     Accounts payable                                                                   $          816,613
     Accrued expenses                                                                              655,452
     Related party notes payable                                                                   835,000
     Note payable                                                                                2,496,158
     Current portion of long-term debt                                                           1,332,786
                                                                                        ------------------

                  Total current liabilities                                                      6,136,009

Long-term debt                                                                                     155,850
                                                                                        ------------------

                  Total liabilities                                                              6,291,859
                                                                                        ------------------

Commitments                                                                                              -

Stockholders' equity:
     Common stock, par value $.0002 per share, 50,000,000 shares
       authorized, 27,474,997 shares issued and outstanding                                          5,495
     Additional paid-in capital                                                                 14,197,225
     Accumulated deficit                                                                       (14,195,505)
                                                                                        ------------------

                  Total stockholders' equity                                                         7,215
                                                                                        ------------------

                  Total liabilities and stockholders' equity                            $        6,299,074
                                                                                        ------------------

----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
                                                                                                       F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                                                 MAGELLAN TECHNOLOGY, INC.

                                                                      Consolidated Statement of Operations

                                                                                  Years Ended December 31,
----------------------------------------------------------------------------------------------------------



                                                                                 1999              1998
                                                                       -----------------------------------

<S>                                                                    <C>                 <C>
Net sales                                                              $       7,601,404   $     4,095,784
                                                                       -----------------------------------

Costs and expenses:
     Costs of sales                                                            1,292,015           952,472
     General and administrative                                                6,786,805         5,161,225
     Compensation expense - stock options                                        130,868           206,382
                                                                       -----------------------------------

                                                                               8,209,688         6,320,079
                                                                       -----------------------------------

                  Loss from operations                                          (608,284)       (2,224,295)
                                                                       -----------------------------------

Other income (expense):
     Gain on settlement                                                          451,111                 -
     Interest expense                                                           (941,667)         (459,070)
     Gain on sale of investment                                                        -           180,023
     Equity in loss of joint venture                                                   -            (5,050)
     Other, net                                                                   11,087           271,908
                                                                       -----------------------------------

                                                                                (479,469)          (12,189)
                                                                       -----------------------------------

                  Loss before benefit for income taxes                        (1,087,753)       (2,236,484)
                    and discontinued operations

Benefit for income taxes                                                               -                 -
                                                                       -----------------------------------

                  Net loss from continuing operations                         (1,087,753)       (2,236,484)
                                                                       -----------------------------------

Results from discontinued operations, net of tax:
     Loss from operations of discontinued segment                             (1,545,079)       (3,102,485)
     Gain on disposal of segment                                               3,083,055                 -
                                                                       -----------------------------------

                  Income (loss) from discontinued operations                   1,537,976        (3,102,485)
                                                                       -----------------------------------

                  Net income (loss)                                    $         450,223   $    (5,338,969)
                                                                       -----------------------------------

Net income (loss) per common share - basic and diluted:
     Continuing operations                                             $            (.04)  $          (.11)
     Discontinued operations                                                         .06              (.16)
                                                                       -----------------------------------

                  Net income (loss) per common share -
                    basic and diluted                                  $             .02              (.27)
                                                                       -----------------------------------

Weighted average common shares - basic and diluted                            25,693,000        19,768,000
                                                                       -----------------------------------



----------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.
                                                                                                       F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                                                                 MAGELLAN TECHNOLOGY, INC.

                                                  Consolidated Statement of Stockholders' Equity (Deficit)

                                                                    Years Ended December 31, 1999 and 1998
----------------------------------------------------------------------------------------------------------







                                   Common Stock       Additional     Unearned
                             ------------------------  Paid-In       Compen-     Accumulated
                                Shares      Amount      Capital       sation       Deficit       Total
                             -----------------------------------------------------------------------------
<S>                            <C>         <C>         <C>          <C>         <C>           <C>

Balance at January 1, 1998:
  Magellan Technology, Inc.
  (as previously reported)     13,872,505  $    2,774  $ 6,890,419  $ (236,000) $ (8,380,223) $ (1,723,030)
  Biological Technologies
  International, Inc.
  (as previously reported)      1,142,725     991,537            -           -      (926,536)       65,001

Restatement for pooling
acquisition of Biological
Technologies International, Inc.
by Magellan Technology, Inc.    1,511,051    (991,006)     991,006           -             -             -

Issuance of common stock for:
  Debt                          2,351,761         471    1,696,080           -             -     1,696,551
  Acquisition of subsidiary     1,375,000         275    1,202,850           -             -     1,203,125
  Services                        125,000          25      101,225           -             -       101,250
  Cash                            370,248          74      579,926           -             -       580,000

Amortization of unearned
compensation                            -           -            -     105,132             -       105,132

Net loss                                -           -            -           -    (5,338,969)   (5,338,969)
                             -----------------------------------------------------------------------------

Balance at December 31,1998    20,748,290       4,150   11,461,506    (130,868)  (14,645,728)   (3,310,940)

Issuance of common stock for:
  Debt and interest             5,828,487       1,166    2,034,867           -             -     2,036,033
  Licenses and technology         250,000          50      140,575           -             -       140,625
  Cash                            461,656          92      161,746           -             -       161,838
  Services                        186,564          37       67,531           -             -        67,568

Issuance of warrants for
interest expense                        -           -      331,000           -             -       331,000

Amortization of unearned
compensation                            -           -            -     130,868             -       130,868

Net loss                                -           -            -           -       450,223       450,223
                             -----------------------------------------------------------------------------

Balance at December 31, 1999   27,474,997  $    5,495  $14,197,225  $        -  $(14,195,505) $      7,215
                             -----------------------------------------------------------------------------




----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
                                                                                                       F-5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                                                 MAGELLAN TECHNOLOGY, INC.

                                                                      Consolidated Statement of Cash Flows

                                                                                  Years Ended December 31,
----------------------------------------------------------------------------------------------------------



                                                                                1999              1998
                                                                       -----------------------------------


<S>                                                                    <C>                <C>
Cash flows from operating activities:
     Net income (loss)                                                 $         450,223  $     (5,338,969)
     Adjustments to reconcile net income (loss) to
       net cash used in operating activities:
         Depreciation and amortization                                           677,451           516,385
         Equity in loss from joint venture                                             -             5,050
         Issuance of warrants for interest                                       331,000                 -
         Stock compensation                                                      130,868           206,382
         Stock issued for services                                                67,568                 -
         Gain on sale of interest in joint venture                                     -          (180,023)
         (Gain) loss on disposal of property and equipment                        (1,013)            2,359
         Gain on sale of discontinued operations                              (3,083,055)                -
         Gain on settlement                                                     (451,111)                -
         Provision and reserves for losses on assets                             111,100           206,800
         Net assets of discontinued operations                                   851,080        (1,271,778)
         (Increase) decrease in:
              Receivables                                                       (760,200)         (680,961)
              Inventories                                                        150,142          (210,252)
              Other current assets                                               (38,056)            5,921
         Increase (decrease) in:
              Accounts payable                                                   (64,330)          761,369
              Accrued expenses                                                   432,437           229,743
                                                                       -----------------------------------
                      Net cash used in
                      operating activities                                    (1,195,896)       (5,747,974)
                                                                       -----------------------------------

Cash flows from investing activities:
     Purchase of property and equipment                                          (48,678)         (167,208)
     Proceeds from sale of property and equipment                                  4,007                 -
     Proceeds from sale of discontinued operation                                500,000                 -
     Proceeds from sale of investment in joint venture                                 -         1,500,000
     Net cash paid in acquisition                                                      -          (500,000)
                                                                       -----------------------------------
                      Net cash provided by
                      investing activities                                       455,329           832,792
                                                                       -----------------------------------

Cash flows from financing activities:
     Increase in notes payable                                                  (500,000)        1,531,136
     Proceeds from related party notes payable                                   640,000         2,940,000
     Payments on related party notes payable                                    (345,000)         (220,141)
     Proceeds from long-term debt                                              1,182,641           790,000
     Payments on long-term debt                                                 (274,331)         (701,220)
     Proceeds from issuance of common stock                                      161,838           580,000
                                                                       -----------------------------------
                      Net cash provided by
                      financing activities                                       865,148         4,919,775
                                                                       -----------------------------------

                      Net increase in cash                                       124,581             4,593

Cash, beginning of year                                                          155,618           151,025
                                                                       -----------------------------------

Cash, end of year                                                      $         280,199  $        155,618
                                                                       -----------------------------------


----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
                                                                                                       F-6

</TABLE>

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements

                                                      December 31, 1999 and 1998
--------------------------------------------------------------------------------


1.   Organization and Business Activity

Organization

The consolidated financial statements consist of Magellan Technology,  Inc. (the
Company) and its wholly owned subsidiaries, BioMeridian Corporation (BioMeridian
Corp.) (formerly ProHealth, Inc.), BioMeridian International,  Inc. (BioMeridian
Intl.) (formerly BioSource,  Inc.), and Biological  Technologies  International,
Inc. (BTI).

The Company  acquired all of the outstanding  stock of BTI on September 16, 1999
in exchange for 3,024,024 shares of the Company's common stock. The consolidated
financial statements at December 31, 1999 and 1998 assume the acquisition of BTI
by the  Company,  as of  January  1,  1998  because  the  shares  issued  in the
acquisition  of BTI represent  control of the total shares of BTI's common stock
issued and  outstanding  immediately  following  the  acquisition.  The business
combination  has been  accounted  for as a pooling of  interests  of the Company
giving effect to the  acquisition  of 100% of the  outstanding  common shares of
BTI,  therefore,  the  assets  and  liabilities  have  been  reflected  at their
historical cost.

On  December  31,  1999 the  Company  sold all of the  common  stock of  SkyHook
Technology,  Inc. (SkyHook) to Enviro Foam  Technologies,  Inc. (Enviro Foam) an
unrelated entity, in exchange for $500,000 cash and a $2,500,000 note receivable
(see note 5). The net assets of SkyHook at December 31, 1999 and its  operations
for the years ended  December 31, 1999 and 1998 are  presented  as  discontinued
operations.

On June 15, 1998,  the Company  acquired  licenses and  technology  from Digital
Health, LLC (Digital). The acquisition included the issuance of 1,375,000 shares
of the  Company's  common  stock and debt of $250,000.  The Company  recorded an
intangible asset in the amount of $1,453,125 related to this transaction.

Business Activity

The Company's continuing operations consist of manufacturing and distribution of
a medical devices used by health care practitioners.
(conducted by BioMeridian Intl.).


--------------------------------------------------------------------------------
                                                                             F-7

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



2.   Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial  statements include the financial  statements of the
Company  and  its  subsidiaries.   All  significant  intercompany  balances  and
transactions have been eliminated.

Estimates  in  the  Preparation  of  Financial  Statements  The  preparation  of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Concentration of Credit Risk

Financial  instruments which potentially subject the Company to concentration of
credit risk consist  primarily  of trade  receivables.  In the normal  course of
business, the Company provides credit terms to its customers.  Accordingly,  the
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
allowances for possible losses which, when realized,  have been within the range
of management's expectations.

The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts and believes it is not exposed to any  significant  credit risk on
cash and cash equivalents.

Cash and Cash Equivalents

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments  with  a  maturity  of  three  months  or  less  to be  cash
equivalents.

Inventories

Inventories are recorded at the lower of cost or market,  cost being  determined
on a first-in, first-out (FIFO) method.


--------------------------------------------------------------------------------
                                                                             F-8

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



2.   Summary of Significant Accounting Policies Continued

Property and Equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation and amortization is determined using the straight-line  method over
the  estimated  useful lives of the assets.  Expenditures  for  maintenance  and
repairs are expensed when incurred and  betterments are  capitalized.  Gains and
losses on sale of property and equipment are reflected in operations.

Goodwill

Goodwill  reflects  the  excess of the  costs of  purchasing  BioMeridian  Intl.
(formerly BioSource,  Inc.) over the fair value of the related net assets at the
date of acquisition, and is being amortized on the straight-line basis over five
years.

Licenses and Technology

Licenses and technology  reflect the costs of certain intangible assets, and are
being amortized on the straight-line basis over five years.

Revenue Recognition

Revenue is recognized upon performance of services. Revenue from medical devices
and  equipment  sales is recognized  when the medical  devices and equipment are
shipped and installed.

Income Taxes

Deferred  income  taxes are  provided  in amounts  sufficient  to give effect to
temporary  differences between financial and tax reporting,  principally related
to net operating loss carryforwards and amortization of intangibles.

Earnings Per Common and Common Equivalent Share

The  computation  of basic  earnings  per  common  share is  computed  using the
weighted average number of common shares outstanding during the year.

The  computation  of diluted  earnings per common share is based on the weighted
average  number  of  shares  outstanding  during  the  year  plus  common  stock
equivalents  which would arise from the  exercise of stock  options and warrants
outstanding  using the treasury  stock  method and the average  market price per
share during the year.  Common stock equivalents are not included in the diluted
earnings per share calculation when their effect is antidilutive.

--------------------------------------------------------------------------------
                                                                             F-9

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



3.   Going Concern

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As of December 31, 1999, the
Company  had a deficit in working  capital  and an  accumulated  deficit.  These
conditions raise  substantial doubt about the ability of the Company to continue
as a going concern.  The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.

The Company's ability to continue as a going concern is subject to the Company's
ability to maintain  profitable  operations or to obtain necessary  funding from
outside  sources.  Management  anticipates  that operations of BioMeridian  will
provide positive cash flow during 2000. However,  there can be no assurance they
will be successful.


4.   Detail of Certain Balance Sheet Accounts

Accounts receivable:
     Trade receivables                                    $       1,189,594
     Receivable from SkyHook                                        223,790
     Less allowance for doubtful accounts                          (317,900)
                                                          -----------------

                                                          $       1,095,484
                                                          -----------------




Inventories:
     Finished goods                                       $         148,231
     Less allowance for obsolescence                                (12,500)
                                                          -----------------

                                                          $         135,731
                                                          -----------------



--------------------------------------------------------------------------------
                                                                            F-10

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


4.   Detail of Certain Balance Sheet Accounts Continued

                                                    December 31
                                        -----------------------------------
                                               1999             1998
                                        -----------------------------------

Licenses and technology:
     Accumulated amortization           $          684,765  $       269,532
     Amortization expense               $          415,233  $       269,532

Goodwill:
     Accumulated amortization           $          429,032  $       223,491
     Amortization expense               $          205,541  $       208,532



5.   Note Receivable

The Company has a note  receivable  from Enviro Foam related to the SkyHook sale
(see note 1).  The note  matures in May 2000 and is secured by all of the assets
of SkyHook.  The note is non interest  bearing and is reserved to extinguish the
company's  line-of-credit  (see note 8). The amount  oustanding  at December 31,
1999 is $2,500,000.


6.   Property and Equipment

Property and equipment consist of the following:


Equipment                                                 $         280,116
Leasehold improvements                                                3,154
Software                                                             45,816
                                                          -----------------

                                                                    329,086

Accumulated depreciation and
 amortization                                                      (123,248)
                                                          -----------------

                                                          $         205,838
                                                          -----------------




--------------------------------------------------------------------------------
                                                                            F-11

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



7.   Related Party Notes Payable

At December 31, 1999, the Company had unsecured notes payable due to an officer,
shareholders and entities owned by shareholders totaling $835,000. Each note has
a stated interest rate of 12% and is payable on demand.  As of December 31, 1999
accrued interest payable on these notes totaled approximately  $131,000.  During
1999  and  1998,  interest  expense  of  approximately,  $379,000  and  $81,000,
respectively, was recognized on obligations due to shareholders of the Company.


8.   Notes Payable

The Company has a revolving  line-of-credit agreement with a bank. The agreement
allows the Company to borrow up to  $3,000,000  at an interest rate equal to the
bank's prime rate plus 1% (9.5% at December 31,  1999).  The balance,  including
all unpaid  interest,  is due May 31, 2000. The  line-of-credit  is secured by a
note receivable (see note 5) and guaranteed by certain shareholders. At December
31, 1999 the balance outstanding on the line-of-credit totaled $2,496,158.


9.   Long-term Debt

Long-term debt is comprised of the following:


Note payable to an individual, due in three
installments which include interest at 10%.  The
installments are: $257,314 due on demand,
$348,409 and $144,277 due on September 30,
2000, and 2001, respectively                              $         750,000

Unsecured notes payable to a company, due on
demand, with interest at the prime rate plus 2%                     218,981

Note payable to an individual due on demand with
interest at 12%, secured by inventory                               200,000

Convertible unsecured notes payable to
individuals due on demand with interest at 12%.
The notes are convertible into three shares of the
Company's common stock for each dollar owed.                        150,000

Convertible unsecured notes payable to
individuals due on demand with interest at 12%.
The notes are convertible into two shares of the
Company's common stock for each dollar owed.                         75,000


--------------------------------------------------------------------------------
                                                                            F-12

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



9.   Long-term Debt Continued

Unsecured, non-interest bearing note payable to
a company, due in  monthly installments of
$15,000                                                              39,460

Unsecured note payable to an entity due in
monthly installments of $5,000 including interest
at 12%, maturing in April 2000                                       39,313


Capital lease obligation (see note 10)                               15,882
                                                          -----------------

                                                                  1,488,636

Less current portion                                             (1,332,786)
                                                          -----------------

                                                          $         155,850
                                                          -----------------



Future maturities of long-term debt are as follows:


                               Year Ended December 31:              Amount
                               -----------------------              ------

                               2000                           $        1,332,786
                               2001                                      149,384
                               2002                                        6,008
                               2003                                          458
                                                              ------------------

                                                              $        1,488,638
                                                              ------------------



10.  Capital Lease Obligation

The Company leases equipment under a noncancellable  lease agreement.  The lease
provides  the  Company the option to purchase  the  equipment  at the end of the
initial lease term.  The  equipment  under capital lease is included in property
and equipment at a cost of approximately $19,000 and accumulated amortization of
approximately $4,000.

Amortization  expense for the equipment  under capital lease for the years ended
December 31, 1999 and 1998 was approximately $4,000 annually.


--------------------------------------------------------------------------------
                                                                            F-13

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


10.  Capital Lease Obligation Continued

The capital lease  obligation has an imputed interest rate of 19% and is payable
in monthly  installments  through January 2003.  Future minimum  payments on the
capital lease obligation are as follows:


Years Ending December:                                              Amount
----------------------                                              ------

     2000                                                                 6,600
     2001                                                                 6,600
     2002                                                                 6,600
     2003                                                                   550
                                                              ------------------

                                                                         20,350

Less amount representing interest                                        (4,468)
                                                              ------------------

Present value of future minimum capital lease                 $          15,882
                                                              ------------------



11.  Income Taxes

The benefit for income taxes is different  than amounts  which would be provided
by applying the  statutory  federal  income tax rate to loss before  benefit for
income taxes for the following reasons:


                                                    Years Ended
                                                    December 31,
                                        -----------------------------------
                                               1999             1998
                                        -----------------------------------

Federal income tax benefit
   at statutory rate                    $          370,000  $       760,000
Meals and entertainment                            (14,000)         (13,000)
Change in valuation allowance                     (356,000)        (747,000)
                                        -----------------------------------

                                        $                -  $            -
                                        -----------------------------------


The results from  discontinued  operations  are  presented  in the  consolidated
statement of  operations  net of tax of $0, due to the  Company's  net operating
loss carryforwards.


--------------------------------------------------------------------------------
                                                                            F-14

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------




11.  Income Taxes Continued

Deferred tax assets (liabilities) are comprised of the following:


Net operating loss carryforwards                          $       1,360,000
Allowance for doubtful accounts                                     108,000
Stock options and warrants                                          166,000
Amortization of intangibles                                         315,000
Valuation allowance                                              (1,949,000)
                                                          -----------------

                                                          $              -
                                                          -----------------

At December 31, 1999, the Company has net operating loss carryforwards available
to offset future taxable income of approximately $4,000,000, which will begin to
expire in 2008.  The  utilization  of the net operating  loss  carryforwards  is
dependent  upon  the tax laws in  effect  at the  time  the net  operating  loss
carryforwards can be utilized.  The Tax Reform Act of 1986 significantly  limits
the annual amount that can be utilized for certain of these  carryforwards  as a
result of the change in ownership.


12.  Discontinued Operations

Condensed discontinued  operations of SkyHook are as follows for the years ended
December 31, 1999 and 1998 are as follows:


                                               Year Ended December 31,
                                           --------------------------------
                                                 1999            1998
                                           --------------------------------

Revenues                                   $         290,468  $     260,555
Costs and expenses                                 1,835,547      3,363,040
                                           --------------------------------

Net loss before income taxes                      (1,545,079)    (3,102,485)
Income taxes                                               -              -
                                           --------------------------------

Net loss                                   $      (1,545,079)  $ (3,102,485)
                                           --------------------------------



--------------------------------------------------------------------------------
                                                                            F-15

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



13.  Supplemental Cash Flow Information

During the year ended December 31, 1999:

o    The  Company  issued  common  stock in exchange  for a  reduction  of notes
     payable and accrued interest of $2,036,033.

o    The Company  acquired  licenses and technology in exchange for the issuance
     of common stock of $140,625.

o    The  Company  satisfied  accrued  expenses  in exchange  for  inventory  of
     $70,540.


During the year ended December 31, 1998:

o    The Company  purchased  licenses  and  technology  totaling  $1,453,125  in
     exchange for a $250,000 note payable and common stock of $1,203,125.

o    Notes payable to certain shareholders totaling $1,650,000 were converted to
     common  stock.  In  addition,  accrued  interest  payable  to  shareholders
     totaling $46,551 was exchanged by the shareholders to exercise warrants for
     common stock.


During the year ended December 31, 1998:

BTI purchased all of the assets of the Greenberg Asset Management Corporation in
a purchase transaction. BTI paid cash and issued a note payable and recorded the
assets from the acquisition as follows:


Fair value of assets acquired                             $       1,500,000
Less amount financed with long-term debt                           (750,000)
Less cash received                                                 (250,000)
                                                          -----------------

                               Net cash paid              $         500,000
                                                          -----------------



--------------------------------------------------------------------------------
                                                                            F-16

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


13.  Supplemental Cash Flow Information Continued

Actual amounts paid for:


                                                    Years Ended
                                                    December 31,
                                        -----------------------------------
                                               1999             1998
                                        -----------------------------------

Interest                                $          451,000  $       495,000
                                        -----------------------------------

Income taxes                            $                -  $             -
                                        -----------------------------------



14.  Stock Options and Warrants

The Company has a stock option plan (the Option Plan), which allows a maximum of
4,500,000 options to be granted to purchase common stock at prices generally not
less than the fair market value of common stock at the date of grant.  Under the
Option  Plan,  grants  of  options  may be made  to  selected  officers  and key
employees  without  regard  to any  performance  measures.  The  options  may be
immediately  exercisable  or may vest  over time as  determined  by the Board of
Directors. However, the maximum term of an option may not exceed five years.

Information regarding the stock options and warrants is summarized below:


                                      Number of
                           --------------------------------   Price Per
                               Options         Warrants         Share
                           ------------------------------------------------
Outstanding at
January 1, 1998                   2,023,336         645,842  $  .20 to 1.20
  Granted                         1,493,788         441,000     .20 to 3.00
  Exercised                        (125,000)              -             .20
  Forfeited                        (309,669)       (151,762)    .30 to  .37
                           ------------------------------------------------

Outstanding at
December 31, 1998                 3,082,455         935,080     .20 to 3.00
  Granted                         1,612,000         458,750     .25 to  .50
  Exercised                         (19,334)              -             .37
  Forfeited                        (486,277)              -     .37 to 3.00
                           ------------------------------------------------

Outstanding at
December 31, 1999                 4,188,894       1,393,830  $  .20 to 3.00
                           ------------------------------------------------


--------------------------------------------------------------------------------
                                                                            F-17

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


15.  Stock-Based Compensation

The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based  Compensation."
Accordingly,  no  compensation  expense has been  recognized  for stock  options
granted to employees.  Had compensation  expense for the Company's stock options
been  determined  based on the fair value at the grant date  consistent with the
provisions of SFAS No. 123, the Company's  results of operations would have been
reduced to the pro forma amounts indicated below :


                                                        Years Ended
                                                        December 31,
                                            ------------------------------------
                                                   1999              1998
                                            ------------------------------------

Net income (loss) - as reported             $          450,223  $    (5,338,969)
Net loss - pro forma                        $       (1,611,640  $    (6,462,860)
Diluted income (loss) per share -
  as reported                               $              .02  $          (.27)
Diluted loss per share - pro forma          $             (.06) $          (.33)
                                            ------------------------------------


The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:


                                                       December 31,
                                            -----------------------------------
                                                   1999             1998
                                            -----------------------------------

Expected dividend yield                     $                -  $              -
Expected stock price volatility                            232%             188%
Risk-free interest rate                                      6%               5%
Expected life of options                          5 to 10 years    2 to 10 years
                                            -----------------------------------

The weighted  average fair value of each option granted during 1999 and 1998 are
$.53 and $.82, respectively.


--------------------------------------------------------------------------------
                                                                            F-18

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



15.  Stock-Based Compensation Continued

The  following  table  summarizes  information  about stock options and warrants
outstanding at December 31, 1999:


                            Outstanding                      Exercisable
              ------------------------------------------------------------------
                             Weighted
                              Average
                             Remaining    Weighted                   Weighted
   Range of                 Contractual    Average                   Average
   Exercise      Number        Life       Exercise      Number       Exercise
    Prices     Outstanding    (Years)       Price     Exercisable     Price
--------------------------------------------------------------------------------

$   .20 to .30    786,938        5.43    $    0.25      786,938    $        0.25
    .35 to .50  3,369,892        5.60         0.40    2,673,225             0.37
   .75 to 1.00  1,149,000        3.99         0.91      500,000             0.93
  1.19 to 1.20    162,000        5.57         1.19        2,000             1.20
          3.00    114,894        0.64         1.30      114,894             1.30
--------------------------------------------------------------------------------

$  .20 to 3.00  5,582,724        5.14    $    0.58    4,077,057    $        0.52
--------------------------------------------------------------------------------



16.  Fair Value of Financial Instruments

The Company's financial instruments consist of cash, receivables,  payables, and
notes  payable.   The  carrying   amount  of  cash,   receivables  and  payables
approximates  fair value because of the  short-term  nature of these items.  The
aggregate  carrying amount of the notes payable  approximates  fair value as the
individual borrowings bear interest at market interest rates.


--------------------------------------------------------------------------------
                                                                            F-19

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------




17.  Commitments

Operating Leases

The Company is  obligated  under  certain  non-cancelable  operating  leases for
rental of office and  manufacturing  space.  Total  lease  expense for the years
ended  December  31, 1999 and 1998,  was  approximately  $267,000  and  $58,000,
respectively.  Future  minimum lease  payments  under  noncancellable  operating
leases with  initial  terms of one year or more are as follows at  December  31,
1999:


Years Ended December 31,                                       Amount
------------------------                                       ------

                           2000                           $          44,700
                           2001                                       1,800
                                                          -----------------

                                                          $          46,500
                                                          -----------------



Royalty Agreement

During  1998,  the Company  entered  into a license  agreement  which grants the
Company the right to include  certain  software in its medical  device  product.
Under the agreement, the Company is obligated to pay $28 for each unit produced.
During the years ended December 31, 1999 and 1998 royalties  expense  related to
this agreement totaled approximately $20,000 and $16,000, respectively.

Employment Agreement

The Company has an employment agreement with one of its employees which requires
annual  payments of $75,000 and a bonus  based on earnings of the  Company.  The
agreement expires on September 30, 2000.

Litigation

The  Company  may  become or is subject to  investigations,  claims or  lawsuits
ensuing  out  of the  conduct  of  its  business,  including  those  related  to
environmental  safety and health,  product liability,  commercial  transactions,
etc.  The  Company is  currently  not aware of any such items  which it believes
could have a material effect on its financial position.



--------------------------------------------------------------------------------
                                                                            F-20

<PAGE>


                                                       MAGELLAN TECHNOLOGY, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


18.  Recent Accounting Pronouncements

In June  1999,  the  FASB  issued  SFAS  No.  137,  "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  date of FASB
Statement No. 133." SFAS 133 establishes  accounting and reporting standards for
derivative  instruments and requires recognition of all derivatives as assets or
liabilities  in the  statement of financial  position and  measurement  of those
instruments at fair value.  SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. The Company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the Company.


--------------------------------------------------------------------------------
                                                                            F-21

<PAGE>




ITEM 8.  CHANGES IN AND  DISAGREEMENTS   WITH   ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURES

         None


<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS:

         The table below sets forth the name,  age and  positions  or offices of
each director and executive officer of Magellan  Technology,  Inc. (MTI) and its
subsidiaries,  BioMeridian  Corporation (BC),  BioMeridian  International,  Inc.
(BII), Biological Technologies  International,  Inc. (BTI), and Magellan Service
Company  (MSC).  The  Board of  Directors  of MTI also  serves  as the  Board of
Directors of BC, BII, BTI and MSC. Each Director of the Company will serve until
the next annual meeting of the shareholders.


           Name             Age                 Position
------------------------- ------ -----------------------------------------------
William A. Fresh            71    Chairman of the Board, MTI, BC, BII, BTI & MSC
Reginald Hughes             55    Director, Vice President, BII
Darwin D. Millet            47    Director, President, BC
Richard I. Winwood          57    Director
Irving Monclova             68    Director
Dr. Robert C. Greenberg     41    Senior Vice President, BC, BII, BTI
Stephen William Fresh       47    Vice President, BII
Joe Galloway                60    Vice President, BII


         William A. Fresh co-founded Magellan Technology, Inc. and has served as
Chairman  of the  Board  and  Chief  Executive  Officer  of  Magellan  since its
incorporation in June of 1989. He was co-founder,  Chairman of the Board and CEO
for Fresh Test  Technology  Corporation,  a designer and  manufacturer  of probe
cards in interface test technology for the semiconductor  industry.  The company
was acquired by Cerprobe  Corporation in April 1995. Since the  acquisition,  he
has served as a director of Cerprobe.  Mr. Fresh served as Chairman of the Board
and CEO of  Satellite  Image  System,  LLC,  a  former  subsidiary  of  Magellan
Technology,  Inc.  and served as Chairman of the Board for Fresh  Technology,  a
PC-based software company.  Between 1996 and 1998, Mr. Fresh served on the Board
of Directors of Sento Technical Innovation Corporation, a publicly held software
company. He is a past director of EFI Electronics Corporation, a publicly traded
manufacturer  and  marketer  of  surge   suppression   equipment  for  computer,
industrial, medical and communication devices. Mr. Fresh founded EFI in 1981 and
subsequently  served as its  chairman  and  president  until 1986.  Mr. Fresh is
currently chairman,  president and owner of Orem Tek Development Corporation,  a
consulting and business park development  corporation.  He is currently Chairman
of the Board and a senior consultant to BrowZ.com.

         Reginald  Hughes was elected to the Board of Directors in 1996. He is a
Vice President for BioMeridian  International,  Inc., and a director of Magellan
Technology,  Inc. He co-founded SkyHook in 1995. From 1981 to 1994, he served in
various  capacities with Eyring  Corporation,  a high tech firm in Provo,  Utah,
specializing in defense contracting.  While with Eyring, Mr. Hughes was promoted
to the  positions  of Director and Vice  President of Finance.  Prior to joining
Eyring   Corporation,   Mr.  Hughes  had  a  successful  career  as  a  Hospital
Administrator.

         Darwin D. Millet has been a member of the Board  since 1994.  He is the
past President and Chief Operating  Officer of SIS, LLC. Prior to coming to SIS,
Mr. Millet served as Executive  Vice President of Layton  Construction  Company,
Inc. (LCC) from 1992 to 1993, and as Chief Financial  Officer from 1986 to 1991.
He now serves the Company as President of BioMeridian Corporation.

         Richard I.  Winwood  joined the Board of  Directors  of the  Company in
1995. Mr. Winwood is involved in several aviation  business  concerns.  In 1983,
Mr.  Winwood  co-founded  Franklin  Covey  Co.  and  subsequently  served as its
Executive  Vice  President  and Chief  Operating  officer.  Franklin  Covey is a
multinational  time management  training and products  company traded on the New
York Stock  Exchange.  Prior to co-founding  Franklin  Covey,  Mr. Winwood had a
successful  career in the  computer  services  industry,  working  with  General
Electric Co., Automatic Data Processing, Inc. and Computer Sciences Corporation.

         Irving Monclova has served on the Board of Directors since August 1998.
He joined  Magellan in late 1996. Mr. Monclova began his career in the military.
He had tours in Europe, Korea,  Republic of Vietnam,  Panama and Puerto Rico. He
culminated his military career as Commander of readiness programs of the reserve
forces.  In 1982,  he joined  Serv-Air,  Inc. In 1989,  he was  promoted to Vice
President  of  Operations  and  Maintenance  and  transferred  to  Headquarters,
Serv-Air,  Inc.,  Greenville,  Texas.  In January  1993,  he was promoted to the
position of Vice President and Chief of Special Operations Programs.

         Robert C. Greenberg  joined the Company as a result of the  acquisition
of BTI  in  September  1999.  He  has a  Ph.D.  in  Biochemistry,  Doctorate  of
Chiropractic, Diplomat in Acupuncture and advanced degrees in both chemistry and
biology.  He is the  inventor  of the BTA S-2000 and the  founder of BTI. He now
serves as Senior Vice President of Research and Development.

         Stephen William Fresh, the son of William A. Fresh,  joined the Company
in November 1997 as the Managing Director of International  Sales. Prior to that
time, he served as the Director of Worldwide Marketing for Sento Corporation. He
has more than 20 years of sales and marketing management experience with hi-tech
companies and he now serves as Vice President of Marketing.

         Joe  Galloway  now serves as Vice  President  of  Business  Relations &
Compliance.  He was a  cofounder  of  BioSource.  Prior to that,  he served as a
member of the Artificial  Heart Research team,  Salt Lake City, Utah as a senior
technician  specialist.  He also served as the supervisor of the test department
at Evans and Sutherland. Mr. Galloway has a degree in electronic technology.

COMMITTEES AND MEETINGS:

         The Board of Directors met seven (7) times during the 1999 fiscal year.
Each of the  directors  attended  at least 75% of the  meetings  of the Board of
Directors and of the committees on which he served.

         The  Board of  Directors  maintains  standing  Audit  and  Compensation
Committees.  The members of the Audit  Committee are William A. Fresh and Darwin
Millet. The Committee met one (1) time during the fiscal year ended December 31,
1999.  Its  functions  are 1) to review and  approve the  selection  of, and all
services  performed  by, the  Company's  independent  auditor;  2) to review the
Company's internal controls;  and 3) to review accounting and financial controls
of the Company.

         The  members of the  Compensation  Committee  are  William A. Fresh and
Irving  Monclova.  The Committee met four (4) times during the fiscal year ended
December 31, 1999.  Its  functions  are to  determine  and approve  compensation
arrangements  for  executive  officers  of the  Company and to oversee any stock
option, stock award or other employee benefit plan or arrangement established by
the Board of Directors  for the benefit of executive  officers,  management  and
employees of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING:

         Section  16(a) of the Exchange Act  requires  the  Company's  executive
officers and directors and persons who own more than 10% of the Common Stock, to
file with the U.S. Securities and Exchange Commission (the "Commission") initial
reports of ownership and reports of changes in ownership of the Common Stock and
other  securities  from which  shares of the Common  Stock may be derived.  Such
directors,  officers and 10% owners are required by  Commission  regulations  to
furnish the Company with copies of all Section  16(a)  reports they file.  Based
solely on a review of the copies of such reports  received by the  Company,  the
Company  believes that the  following  reports were not filed on a timely basis:
Form 3 for  William  Crouch due 2/6/99 was filed on  2/10/99;  Form 3 for Irving
Monclova due in April 1998 was filed on 10/4/99; Form 5 for William A. Fresh due
2/14/99  was filed on 2/2/00;  Form 5 for Reva Luana Fresh due 2/14/99 was filed
on 2/2/00; Form 5 for WAF Investment Company due 2/14/99 was filed on 2/2/00.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE:

         The following table sets forth the  compensation  paid to the Company's
Chief Executive  Officer and President of BioMeridian  Corporation  (BC) for the
three fiscal years ended December 31, 1999. No executive  officer of the Company
received salary and bonus  compensation in excess of $100,000 for the year ended
December  31,  1999.  The  Chairman  and CEO of the  Company has agreed to serve
without salary compensation.  In April 1998, the Board granted a stock option to
the  Company's CEO for 150,000  shares of common stock.  In April 1997 the Board
granted a stock option to the Company's CEO for 250,000  shares of common stock.
In December  1999,  the Board  granted a stock option to the President of BC for
300,000 shares of common stock which are exercisable based on the accomplishment
of certain measures during the year 2000.

<TABLE>
<CAPTION>

-------------------------------------- ------------------------------------------------------- ---------------------
                                                                                                    Long-term
                                                        Annual Compensation                        Compensation
-------------------------------------- ------------------------------------------------------- ---------------------
                                                                                    Other
                                                                                    Annual          Securities
      Name & Principal Position           Year             Salary         Bonus  Compensation   Underlying Options
-------------------------------------- ------------- ------------- ------------- ------------- ---------------------
<S>                                        <C>            <C>                 <C>           <C>             <C>
William A. Fresh, CEO                      1999                 0             0             0                     0
                                           1998                 0             0             0               150,000
                                           1997                 0             0             0               250,000
Darwin D. Millet 1                         1999           120,000             0             0               300,000
                                           1998                 0             0             0
                                           1997                 0             0             0
-------------------------------------- ------------- ------------- ------------- ------------- ---------------------
</TABLE>

Option Grants in Last Fiscal Year

The following  table sets forth the options  granted by the Company to executive
officers in the last fiscal year.

<TABLE>
<CAPTION>
-------------------------------------- ----------------- -------------------- ----------------- --------------------
                                                         Percent of Options
                                                             Granted to
                                          Number of         Employees in       Exercise Price
      Name & Principal Position        Options Granted       Fiscal Year         per share        Expiration Date
-------------------------------------- ----------------- -------------------- ----------------- --------------------
<S>                                             <C>                    <C>               <C>               <C>
Darwin D. Millet                                300,000                16.2%             $ .50             Dec 2006
President

Reginald Hughes                                 150,000                 8.1%             $ .50             Dec 2006
Vice President

Joe Galloway                                     75,000                 4.0%             $ .50             Dec 2006
Vice President

Blair K. Blacker 2                              300,000                16.2%             $ .50             Jan 2006
Vice President

Douglas M. Angus 2                              200,000                10.8%             $ .50             Jan 2006
Vice President
-------------------------------------- ----------------- -------------------- ----------------- --------------------
</TABLE>


Aggregated Option Exercises in Last Fiscal Year and Year End Option Values

The following  table sets forth the aggregate value of options to acquire shares
of the Common Stock held by the Chief Executive Officer on December 31, 1999.

<TABLE>
<CAPTION>
------------------------------------ ----------------------------------------- ----------------------------------------
                                                                                  Value of Unexercised In-the-Money
     Name & Principal Position       Number of Unexercised Options @ FYE 1999          Options @ FYE 1999 3
------------------------------------ ----------------------------------------- ----------------------------------------
                                            Unexercisable         Exercisable         Unexercisable        Exercisable
------------------------------------ --------------------- ------------------- --------------------- ------------------

<S>                                               <C>                 <C>                       <C>                 <C>
William A. Fresh                                        0             400,500                    $0                 $0
Darwin D. Millet                                  300,000              50,500                    $0                 $0
Reginald Hughes                                   150,000                   0                    $0                 $0
Stephen William Fresh                                   0             125,000                    $0                 $0
------------------------------------ --------------------- ------------------- --------------------- ------------------
</TABLE>

1 This individual  began  employment with the Company in July 1999 and currently
receives the annual salary  indicated.

2  Individual  has  terminated  employment  with the  Company as a result of the
disposition and sale of SkyHook and no longer serves as an executive  officer of
the Company.

3 Calculated based on the difference between the exercise price and the price of
a share of the Company's Common Stock on December 31, 1999.

         DIRECTOR  COMPENSATION:  Directors of the Company are currently paid no
fee for  their  service  on the  Board  of  Directors.  Directors  are  also not
currently paid a fee for, or reimbursed  for expenses  incurred with respect to,
attendance at board or committee meetings.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table  lists the  number  of  shares  of  Common  Stock
beneficially  owned as of December  31, 1999 by each person known by the Company
to be the  beneficial  owner of more than five percent (5%) of the Common Stock,
by each  director of the Company,  by the Chief  Executive  Officer,  and by all
officers and directors of the Company as a group.  Unless noted otherwise,  each
person  named has sole voting and  investment  power with  respect to the shares
indicated.  The  percentages  set forth have been  computed  based on 29,386,490
shares,  which is the  number of shares of the  Common  Stock  outstanding  plus
exercisable  warrants  and options  held by officers  and  directors,  excluding
treasury shares held by the Company, outstanding as of December 31, 1999.

<TABLE>
<CAPTION>
-------------------------------------------------------------- ----------------------------------------------------
                                                                  Beneficial Ownership as of December 31, 1999
-------------------------------------------------------------- ----------------------- ----------------------------
                                                                  Number of shares         Percentage of class
             Name & Address of Beneficial Owner                                                outstanding
-------------------------------------------------------------- ----------------------- ----------------------------
<S>                                                            <C>                                           <C>
William A. Fresh                                               9,616,172 4                                   32.7%
176 Emeraud Drive
St. George, Utah  84770
</TABLE>



4 Includes  4,450,560  shares held by WAF  Investment  Company,  a Utah  limited
partnership,  of which Mr. Fresh is a general partner;  1,133,332 shares held by
Reva Luana Fresh,  spouse;  50,000  shares held by the William A. and Reva Luana
Fresh Family Living Trust;  645,237 shares held by William A. & Reva Luana Fresh
Charitable  Remainder  Trust,  60,000  shares held in trusts in which Reva Luana
Fresh is the  custodian;  75,000  shares held in trust in which Mr. Fresh is the
custodian;  316,667  shares  held  by  Orem  Tek  Development,  a  Utah  limited
partnership,  of which Mr. Fresh is a general  partner;  808,892 shares issuable
upon the exercise of currently  exercisable warrants and 400,500 shares issuable
upon presently exercisable options.

<PAGE>


<TABLE>

------------------------------------------------------------ ----------------------- ----------------------------
<S>                                                            <C>                                           <C>
Reginald Hughes                                                408,750 5                                      1.4%
1482 East 920 South
Provo, Utah  84606

Darwin D. Millet                                               258,834 6                                       .9%
12090 South Woodridge Road
Sandy, Utah  84124

Richard I. Winwood                                           3,647,715 7                                     12.4%

Irving Monclova                                                298,500 8                                      1.0%

Dr. Robert C. Greenberg                                      1,359,748                                        4.6%

Stephen William Fresh                                          183,333 9                                       .6%

Joe Galloway                                                   275,000 10                                      .9%

Ballard Investments                                          1,874,956 11                                     6.4%

All officers and directors as a group (8 persons)            16,048,052                                      54.6%
------------------------------------------------------------ ----------------------- ----------------------------
</TABLE>

5 This amount  includes  3,750  shares  issuable  upon the exercise of currently
exercisable  warrants.   The  shares  are  held  by  a  Utah  limited  liability
partnership of which Mr. Hughes is a general partner.

6 Includes  67,167  shares  issuable  upon  currently  exercisable  warrants  or
options.

7 The Richard I. Winwood  Revocable  Living Trust holds 3,501,531  shares.  This
amount also  includes  146,184  shares  issuable  upon the exercise of currently
exercisable   warrants.

8 Includes  285,000  shares  issuable  upon  currently  exercisable  options.

9 Includes 125,000 shares issuable upon currently exercisable options.

10 Includes 75,000 shares issuable upon currently exercisable options.

11 This amount  includes  185,837 shares issuable upon the exercise of currently
exercisable  warrants.  Craig Ballard, a general partner of Ballard Investments,
has the power to vote the shares and to make  investment  decisions with respect
to the shares on behalf of Ballard Investment.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

REVOLVING LINE OF CREDIT GUARANTEES:

         The Company has entered into a revolving line-of-credit agreement. This
agreement is for a $3,000,000 line of credit. This line of credit bears interest
at a variable rate of prime plus 1.0% and matures on May 31, 2000. Inventory and
the personal guarantee of three individuals, including the Company's Chairman of
the Board, a director, and a major shareholder, jointly and severally personally
guarantee this line of credit. As of December 31, 1999 the line of credit had an
outstanding  balance  $2,496,158.  This line of credit has been used to fund the
operations of the Company.

NOTES PAYABLE TO SHAREHOLDERS:

         During the year ended  December  31,  1999 the  Company  borrowed a net
amount of $295,000 from the Company's Chief Executive Officer,  or from entities
controlled  by this  individual,  under two  separate  $100,000  unsecured  note
payable  agreements,  one $50,000 unsecured note payable agreement,  one $30,000
unsecured  note  payable  agreement,  and one  $15,000  unsecured  note  payable
agreement. Each note payable bears interest at 12% and is payable upon demand.

         Effective  March 31, 1999,  $1,300,000  of related  party notes payable
were  converted to common stock of the Company.  In addition,  accrued  interest
payable on related  party notes payable of $11,033 was used by one related party
to exercise warrants to purchase common stock.

         During 1998 a  Director/Shareholder  who also serves as the Chairman of
the Board loaned $2,590,000 to the Company through either himself or entities in
which he held a  controlling  interest.  The notes bear  interest at 12% and are
payable  upon  demand.  During  1998,  $1,150,000  of these  notes  payable  was
converted to common stock of the Company.  In addition,  the interest payable of
$37,906 was used by the  Director/Shareholder  to exercise  warrants to purchase
common  stock.  As of December 31, 1998, a total of  $1,740,000 of notes payable
was outstanding and payable to this shareholder.

         During 1998 another  Director/Shareholder  converted  $250,000 of notes
payable to common stock of the Company.  In  addition,  the interest  payable of
$8,645 was used by the  Director/Shareholder  to  exercise  warrants to purchase
common stock.

NOTES PAYABLE:

         As of December  31,  1998,  the Company  owed  $27,693 to a  government
entity.  Terms of the note  include  interest  at 8%,  monthly  installments  of
$2,507. The note is secured by inventory and personal guarantees from a Director
and two  individuals.  The two  individuals  are former  SkyHook  officers;  the
director is also an officer of one of the Company's subsidiaries.




<PAGE>


                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>

         (a) EXHIBITS: The following documents are furnished as exhibits to this Form 10-KSB.

---------------- ------------------------------------------------------- -------------------- --------------------
S-B Item Number                Number of Options Granted                   Incorporated by      Filed Herewith
                                                                              Reference
---------------- ------------------------------------------------------- -------------------- --------------------
            <S>                                                                <C>                     <C>
            3-1  Articles of Incorporation of the Company                      X 12
            3-2  Bylaws of the Company                                         X 13
            3-3  Amendment to Articles of Incorporation approved March         X 14
            3-4  Amendment to Articles of Incorporation approved June                                  X
           21-1  Subsidiaries of the Company                                                           X
           27-1  Financial Data                                                                        X
---------------- ------------------------------------------------------- -------------------- --------------------
</TABLE>

12 This  exhibit was filed with the  Commission  as an exhibit to the  Company's
Registration  Statement  on Form  S-18,  filed on  September  20,  1989,  and is
incorporated herein by reference.

13 This exhibit was filed  previously  with the  Commission as an exhibit to the
Company's  Annual Report on Form 10-KSB for the fiscal year ending  December 31,
1992, filed on October 15, 1993.

14 This was incorporated with the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1995 filed on March 29, 1996.

(b)      REPORTS ON FORM 8-K:

         The  Company  filed a report on Form 8-K dated  September  17,  1999 on
October  1,  1999  reporting  the  acquisition  of and  merger  with  Biological
Technologies  International,  Inc.  and  Magellan  Technology,  Inc.  The entire
Agreement and Plan of Merger was filed as part of the report.

         The Company filed a report on Form 8-K dated June 30, 1998 and a Report
on Form 8-K/A dated August 14, 1998  reporting  the  acquisition  and  financial
position of Digital Health, LLC. The financial statements of Digital Health, LLC
were filed as part of the report.


<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                            MAGELLAN TECHNOLOGY, INC.


                                            By: /s/ William A. Fresh
                                            --------------------
                                            William A. Fresh, Chairman & C.E.O.

                                            Date:  March 30, 2000


         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

         Name                               Position                   Date

/s/ William A. Fresh                Chairman of the Board and     March 30, 2000
---------------------------         Chief Executive Officer
William A. Fresh                    (Principal Executive
                                    and Financial Officer)

/s/ Reginald Hughes                 Director                      March 30, 2000
---------------------------
Reginal Hughes

/s/ Darwin D. Millet                Director                      March 30, 2000
---------------------------
Darwin D. Millet

/s/ Richard I. Winwood              Director                      March 30, 2000
---------------------------
Richard I. Winwood

/s/ Irving Monclova                 Director                      March 30, 2000
---------------------------
Irving Monclova